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Research is provided by our team of experienced analysts. Our work is idea driven, based on independence of thought, sector expertise, and firmly focused on fundamentals and valuation of telecoms and internet names globally. New Street is headquartered in London with offices in New York, Singapore and Australia. 

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Equity Bottom-Up

Over the last year, either the market has implicitly marked down the value of <a href="https://www.smartkarma.com/entities/21085" target="_blank" data-smartkarma-citation="entities:21085:1">Naspers (NPN SJ)</a> unlisted e-commerce assets by $18bn, OR the implied holdco discount applied to key listed assets has increased from 25% to 45%. We see no fundamental reason why either is justifiable and think the opposite should actually be the case.<ul><li>The unlisted e-commerce assets have performed well, and are continuing to gain traction in their respective markets, with losses easing in its key segments (OLX) suggesting the devaluation of the asset is unjustified.</li><li>Regarding the holdco discount, the sale of Allegro highlighted the tax efficient structures in place for its key listed assets resulting in negligible tax liabilities on sale.</li></ul>One reason for the expanding discount has to be the market fears around the increased capital allocation to new ventures (EdTech, food delivery). However, the amount spent on M&amp;A (as a percentage of market cap) over the last few years is similar to spending at <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent (700 HK)</a>, and  below other big internet names. Further, management's success in other ventures (Avito, <a href="https://www.smartkarma.com/entities/22760" target="_blank" data-smartkarma-citation="entities:22760:1">Mail.ru (MAIL LI)</a>, Flipkart etc) suggests the market should give management more credit for its new ventures.We retain our Buy recommendation, and lift our price target from ZAR3,000 to ZAR4,100, primarily as a result of the increase in our Tencent TP from HK$260 to HK$371 (well supported by recent stellar results).

Over the last year, either the market has implicitly marked down the value of Naspers (NPN SJ) unlisted e-commerce assets by $18bn, OR the implied holdco discount applied to key listed assets has increased from 25% to 45%. We see no fundamental reason why either is justifiable and think the opposite should actually be the case.The unlisted e-commerce assets have performed well, and are continuing to gain traction in their respective markets, with losses easing in its key segments (OLX) suggesting the devaluation of the asset is unjustified.Regarding the holdco discount, the sale of Allegro highlighted the tax efficient structures in place for its key listed assets resulting in negligible tax liabilities on sale.One reason for the expanding discount has to be the market fears around the increased capital allocation to new ventures (EdTech, food delivery). However, the amount spent on M&amp;A (as a percentage of market cap) over the last few years is similar to spending at Tencent (700 HK), and  below other big internet names. Further, management's success in other ventures (Avito, Mail.ru (MAIL LI), Flipkart etc) suggests the market should give management more credit for its new ventures.We retain our Buy recommendation, and lift our price target from ZAR3,000 to ZAR4,100, primarily as a result of the increase in our Tencent TP from HK$260 to HK$371 (well supported by recent stellar results).

Market Is Ignoring Naspers' Investment Track Record. Discount to Underlying Value Is Unjustified

Germany

Delivery Hero SE offers e-commerce services. The Company provides online food ordering services. Delivery Hero serves customers Germany.

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Delivery Hero SE (DHER GR)

Market Is Ignoring Naspers' Investment Track Record. Discount to Underlying Value Is Unjustified

Over the last year, either the market has implicitly marked down the value of Naspers (NPN SJ) unlisted e-commerce assets by $18bn, OR the implied...

New Street Research

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